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Colombo -Sri Lanka slapped a tax on highway accidents in a drastic austerity price range unveiled Friday because the nation faces a significant international alternate disaster.
Finance Minister Basil Rajapaksa stated car accidents might be taxed beneath new income proposals to maintain the price range deficit at 8.8 p.c of GDP in 2022, down from 11.1 p.c this yr.
“It’s proposed to impose a price on automobiles assembly with accidents,” Rajapaksa instructed parliament. “By way of this initiative, it’s anticipated to scale back the variety of motorized vehicle accidents.”
He didn’t give particulars of the crash tax.
Sri Lanka’s roads are among the many most harmful on this planet with over 3,000 visitors fatalities and a few 25,000 severely injured yearly.
Rajapaksa admitted that the nation was dealing with a critical disaster with international reserves at $2.3 billion, down from $7.5 billion when his brother Gotabaya took over as president two years in the past.
“Now we have to just accept that the rise in costs is because of a scarcity of products, the imposition of import restrictions, the overreliance on imports, the depreciation of the rupee along with the failure to adequately encourage producers,” he stated.
There have been no measures to ease the import ban on a bunch of products, together with automobiles, spares, tiles and even some important meals imports, imposed in March final yr.
Nonetheless, Rajapaksa elevated taxes on cigarettes, liquor and slapped a one-off tax on corporations incomes earnings of over 2,000 million rupees ($10 million) and raised the VAT on monetary providers from 15 to 18 p.c.
He additionally introduced elevating the retirement age of public servants from 60 to 65 years, a transfer that may delay the fee of terminal advantages to hundreds of workers and thereby scale back authorities spending for the subsequent 5 years.
The price range deficit of 1,628 billion rupees ($8.14 billion) might be bridged with borrowings, together with $5.08 billion in international borrowings, in response to official figures.
Central Financial institution officers have stated the nation is dealing with its worst international alternate disaster for the reason that creation of a free economic system in 1978.
Scores company Moody’s downgraded Sri Lanka’s international debt ranking final month.
The choice was fuelled by the absence of “complete financing” to make looming debt repayments, in response to Moody’s.
Sri Lanka’s economic system shrank a file 3.6 p.c final yr due to the Covid-19 pandemic.
The central financial institution expects development of 4-5 p.c this yr with the gradual reopening of the economic system and the roll-out of a vaccine programme.
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